Here’s the inflation breakdown for March 2026 — in one chart

Inflation rose sharply in March as the Iran war drove up gasoline and other prices for consumers.

The consumer price index, a key measure of inflation, rose 3.3% in March from a year earlier, the U.S. Bureau of Labor Statistics reported Friday. This is up from 2.4% in February.

The March data represents the first CPI report since the Iran war began on February 28 and shows the financial consequences for consumers from the first month of the war in the Middle East.

While the United States and Iran agreed to a two-week ceasefire late Tuesday, economists said it would likely take several weeks or months for the inflationary effects of the war to subside, and a protracted conflict risks driving up consumer prices more broadly in areas such as food, airline tickets and manufactured goods.

“Inflation is a problem and it’s going to get worse,” said Mark Zandi, chief economist at Moody’s. “Obviously the war in Iran is causing serious damage.”

“We were cautiously optimistic about inflation heading into this year as price pressures from tariffs eased,” said Thomas Ryan, North America economist at Capital Economics.

“We’re basically just waiting right now to see what happens with the energy price shock,” Ryan said. “If it’s long-lived, we’d be more concerned about it leaking into other areas of consumers’ wallets,” he said.

The Iran war’s rise in inflation also complicates the Federal Reserve’s job of setting interest rate policy.

At the March meeting, central bank officials said they expected to cut interest rates once this year, but some said raising borrowing costs might be necessary if the Iran war leads to persistently rising inflation.

Fed officials also said they must remain “nimble” in assessing the war’s impact on inflation, which remains above the Fed’s 2% target.

“Inflation is well above what everyone (both consumers and the Federal Reserve) are comfortable with, and this situation is not going to get better, at least for the next few months,” Zandi said.

The recent increase in energy prices is linked to oil.

Iran has effectively blocked ship traffic in the Strait of Hormuz, a waterway used for shipping. About one fifth of the world’s oil supply. Even after the ceasefire, the blockade appears to be largely still intact, according to reports.

Consumers paid an average of $4.12 per gallon as of Monday, according to data from the U.S. Energy Information Administration. latest weekly data – was about $2.94 before the war started.

The jump above $4 per gallon marks the first time the national average price has surpassed that price threshold since 2022, when Russia’s invasion of Ukraine caused prices to rise, according to EIA data.

Meanwhile, high oil prices are affecting other areas of household finances.

For example, airlines increase ticket prices, Increasing baggage fees, adding fuel surcharges, and shortening flight schedules to manage the effects of the Iran war; all of which increases the price tag for travelers.

The increase is especially pronounced on international flights: For example, the average round-trip economy fare from the U.S. to Rome rose from $846 on Feb. 23 to $1,165 as of March 30, according to the latest data. weekly flight data Compiled by travel search engine Kayak. A round-trip ticket to Hong Kong increased from $1,042 to $1,403 in the same period.

If jet fuel prices remain near their current levels for a year, airlines will have to increase ticket prices by about $50 for each one-way fare, or about 17%, Deutsche Bank analysts wrote in a report Tuesday.

Economists stated that food prices are another area that may see upward pressure due to rising oil prices.

For example, they said the increase in diesel prices has affected transportation costs associated with transporting food to grocery stores by trucks. Additionally, fertilizer is another important export through the Strait of Hormuz, posing the danger of rising prices for farmers and consumers.

According to CPI data, food prices increased by 2.7% compared to last year. Some categories, such as beef and coffee, have seen prices rise further due to unique issues that have led to reduced supply.

Americans may also see increased costs when shopping through e-commerce sites. Starting April 17, Amazon will impose a 3.5% fuel and logistics surcharge for third-party sellers in the US and Canada. United Delivery Service And FedEx They have also imposed higher fuel surcharges since the beginning of the Iran war.

Capital Economics’ Ryan said it could take months for some of the inflationary effects of energy prices to feed through supply chains and be reflected in consumers’ wallets. The impact “could be very broad,” he said.

Of course, the ultimate inflationary impact will depend on the form of the conflict.

Ryan said CPI inflation would likely fall “relatively quickly” if the conflict ends by the end of April and the Strait of Hormuz gradually opens. He said he expects this rate to peak at around 4 percent and drop to 3 percent by the end of 2026.

But he said prolonging the war would keep inflation high and increase the likelihood of a broader shift to goods and services.

Even if more oil tankers start flowing through the Strait of Hormuz, it could take some time for things to return to normal, economists said.

For example, they said it would take time to repair damage from attacks on energy infrastructure in the Middle East.

JP Morgan Private Bank’s Seydl used the phrase “up like a rocket and down like a feather” to describe possible price dynamics; This means that prices for gasoline and other areas of household balance sheets often rise quickly during a shock, but then fall slowly.

Once the conflict is resolved, there will likely be a permanent “risk premium” in the price of oil, Seydl said. “Investors know this has happened and it could happen again,” he said.

Higher ancillary airline fees, such as those for checked bags, could also become permanent, especially if demand remains strong, analysts said.